On March 17, 2020, the Commodity Futures Trading Commission ("CFTC") issued a series of no-action letters designed to provide regulated entities with relief from certain obligations in response to the growth of COVID-19. Specifically, the Division of Swap Dealer and Intermediary Oversight ("DSIO") issued five no-action letters providing relief to futures commission merchants, introducing brokers, swap dealers, retail foreign exchange dealers, floor brokers, and other market participants (collectively, "DSIO Regulated Entities"). See CFTC Staff Letters 20-02, 20-03, 20-04, 20-05, 20-06. Simultaneously, the Division of Market Oversight ("DMO") issued three no-action letters providing similar relief to swap execution facilities and certain designated contract markets. See CFTC Staff Letters 20-07, 20-08 and 20-09.
The no-action letters provide relief from the following obligations:
- Recording Voice Trading and Telephone Communications and Time Stamping Requirements. DSIO Regulated Enmities will be exempt until June 30, 2020, from recording oral communications related to voice trading and other telephonic communications and time stamping requirements, as applicable, when working remotely.
- Annual Compliance Reports. Futures commission merchants, introducing brokers and swap dealers will be provided an additional 30 days to furnish annual compliance reports. Swap execution facilities will be provided an additional 120 days to submit annual compliance reports and fourth quarter financial reports.
- Requirements Regarding Physical Location of Floor Brokers. Floor brokers will be exempt until June 30, 2020, from being required to be located on the premises of a designated contract market and from registering as introducing brokers while working remotely.
- Audit Trail Requirements. Swap execution facilities will be exempt until June 30, 2020, from making oral communications recordings for audit trail recordkeeping and reconstruction purposes. Designated contract markets will also be exempt from producing complete audit trail and other audit-trail requirements while DSIO Regulated Entities and swap execution are exempt from oral communication recording requirements.
The issuance of these no action letters represent the first significant step the CFTC has taken to address COVID-19.
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